The structures, binding energies, and enthalpies of small molecular clusters incorporating a single lithium cation and up through six waters have been determined with extended Gaussian basis sets using Hartree-Fock and post-Hartree-Fock methods. The resulting properties are analyzed with respect to both basis set completeness and degree of correlation recovery, including core-core and core-valence effects. Although the lithium-water interaction is largely electrostatic in nature, small basis sets, lacking in polarization and near-valence diffuse functions, drastically overestimate the strength of the bond (by 20 kcal/mol or more) and underestimate the Li+...O distance by up to 0.1 angstrom. Their poor performance is attributable to inherent errors in describing the electric moments and polarizability of water and to large basis set superposition errors. Thus, the accuracy with which the fundamental lithium-water interaction could be modeled was primarily dependent on the quality of the Gaussian basis set and not upon the level of correlation recovery. Basis set enlargement and correlation effects both tend to reduce the strength of the Li+(H2O) bond, but produce corrections of opposite sign for the Li+...O bond length. Although correlation effects play a minor role in describing the lithium-water interaction, as the size of the cluster increases and the number of waters involved in multiple hydrogen bonds grows, correlation recovery can become significant.